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New Perpetual boss talks tough on costs

Wealth manager Perpetual’s new chief executive says the company will aggressively cut costs as profits continue to fall and investment markets remain weak.

Announcing a 25-per-cent drop in first half profit, Geoff Lloyd said cost cuts were a main priority.

‘‘I have formed a dedicated internal team to identify further meaningful cost reductions across our business units, commencing immediately,’’ the CEO said today.

An international consulting firm has been appointed to help identify reductions.Cost saving initiatives will likely start before the end of the current financial year.

In January, Perpetual lost chief executive Chris Ryan after the board disagreed with his strategy for the company. Mr Lloyd took up the role on February 6.

Challenging economic conditions had weighed heavily on investment markets, and Perpetual’s average funds under management, of $8.2 billion, as of December 31, 2011, were down 7 per cent compared with six months earlier, Mr Lloyd said.

‘‘Clearly, market sentiment has not supported industry fund flows, demand for wealth advice or lending activity, the three main influences on our revenue,’’ he said. ‘‘However, we can’t rely on an improvement in the external environment to drive improved performance.’’

Perpetual today posted a net profit of $22.93 million for the six months to December 31, down 25 per cent on the $35 million in the previous corresponding period. The result included a $10.2 million expense from Perpetual’s closure of its Dublin business, plus a $2.2 million loss on market investments.

The group’s $197.67 million revenue was down 14 per cent from the same period in the previous year.

As advised one week ago, Perpetual’s underlying profit for the six months to December was $34.7 million, down 15 per cent from the same period a year earlier.